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A New Prince of Wall Street Buys Up Art

For more than a century, successive generations of Wall Street titans have lavished their riches on art, hoping that a Monet or a Cézanne might add a bit of polish to the rough edges of their deal making. Now, young, little-known billionaires who manage hedge funds are roiling the art market, using the vast pools of capital they have accumulated to snatch up some of the world's most recognizable images.

Leading the way has been Steven A. Cohen, a publicity-shy hedge fund magnate living in Greenwich, Conn., who took home $350 million in 2003 and even more last year, according to people close to him.

Over the last five years, Mr. Cohen, 48, has spent more than $300 million - amassing a collection that includes one of Jackson Pollock's iconic drip paintings, a Manet self-portrait, a Monet waterlilies painting and other trophy works including a Degas sculpture of a young dancer and well-known Pop works like Andy Warhol's "Superman" and Roy Lichtenstein's "Popeye."

And most recently, in what may be a wink at his reputation for being one of Wall Street's predatory traders, he paid $8 million for the British artist Damien Hirst's 14-foot tiger shark, submerged in a tank of formaldehyde.

"He is a significant collector," said Donald B. Marron, the chairman of Lightyear Capital and former chief executive of PaineWebber, who is also a trustee at the Museum of Modern Art and has seen Mr. Cohen's collection. "It's a very personal collection, too. He is emotionally involved, has a good eye and knows the works in their context. Those are the ingredients that make a good collector."

Along with just a few other collectors, Mr. Cohen is willing to pay top dollar - often what some specialists say is too much - to get what he wants. Each time word circulates that Mr. Cohen has bought a Pollock for $52 million or a Warhol for $25 million, dealers and collectors from Los Angeles to São Paulo cannot stop talking about the prices being paid.

Mr. Cohen, keeping with past practice, declined to be interviewed for this article.

"Psychologically, his purchases inform a whole subcategory of collectors that there is significant, substantial money being spent," said Perry Rubenstein, a Manhattan art dealer. "It adds value - stimulates discourse not just in the artists he is buying but in the value of other artists."

Indeed, in the art world, tracking Mr. Cohen's purchases have become something of a sport. The air of the unknown about him only heightens the rumors and the exaggeration over his purchases, as indeed it does about his trades on Wall Street. Still, dealers who have worked with Mr. Cohen gave the prices for the purchases cited in this article.

The rapid emergence of Mr. Cohen in the collecting world reflects a shift of power on Wall Street. Just as the collections of J. Pierpont Morgan in the early 1900's and Saul P. Steinberg and Henry R. Kravis in the 1980's tracked the booms in their businesses - for Mr. Morgan, underwriting American industrialization; for Mr. Kravis and Mr. Steinberg, leveraged buyouts and takeovers - Mr. Cohen's splurge is a vivid illustration that the real fortunes being made these days are in the hedge fund world.

But unlike, say, Andrew Mellon, who gave art and money to institutions throughout his life, or the cosmetics heir Ronald S. Lauder, the driving force behind the Neue Galerie in Manhattan and one of the Museum of Modern Art's biggest benefactors as well as a passionate collector, Mr. Cohen tends to buy what some call trophy art - recognized examples of world-class names.

Indeed, while few will publicly assess Mr. Cohen's buying patterns, some say that he tends to buy with his ears rather than his eyes.

Still, he is one of a small circle that includes Mr. Lauder; Stephen A. Wynn, the Las Vegas hotel and casino owner; S. I. Newhouse Jr., the publisher; and the financiers Leon D. Black and Mr. Kravis who might be willing to spend more than $10 million on a painting. So Mr. Cohen is relentlessly courted by dealers and auction-house officials trying to sell him something.

A short, unimposing man, Mr. Cohen - known as Stevie - has a net worth that Forbes magazine estimates at $2 billion, and he cultivates an aura of quirky mystery. Despite his position as one of Wall Street's most influential investors, he has a policy of not sitting for photographs. Meticulous about security, he requires that all his employees sign confidentiality agreements, and he keeps the temperature on the trading-room floor chilly enough so that his traders wear fleece while he opts for his trademark sweater.

So far, Mr. Cohen has not used his collection as other Wall Street magnates have, as a lever to gain entree into Manhattan social circles or a seat on the board of the Metropolitan Museum of Art. He has, however, joined the painting and sculpture acquisition committee at the Museum of Modern Art, a first step to becoming a member of its board.

As a trader, he is known to be single-minded and relentless, leaping from one position to the next and seeing opportunities in the markets that many others do not.

"Steve has attacked the art world in the same fashion that he attacks his business," said David Ganek, a former partner at Mr. Cohen's hedge fund, SAC Capital, who now runs his own hedge fund and is himself a significant art collector. "It's a passion that has taken on a life of its own."

In the art world, Mr. Cohen maintains limited visibility, sitting in sky boxes at Sotheby's and Christie's the night of big auctions, as other major collectors do, and letting dealers like Larry Gagosian and William Acquavella bid for him. Dealers say he makes a point of attending most major art events. Last week, he took in the New York Art Show. Two years ago, he was at the European Fine Art Fair in the Dutch city of Maastricht with a family member in tow, perusing booths filled with fine French furniture and antiquities along with modern and old master paintings.

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Mr. Cohen's love of art appears to be recently acquired. He began his serious collecting five years ago, starting with Manet and Monet before moving quickly into the contemporary realm, scooping up paintings and photographs by Richard Prince, whose market value has taken off considerably in the last year.

"When he buys something like Damien Hirst's shark for that much money," Mr. Rubenstein, the dealer, said, "it causes a pause even among the cognoscenti. They think if Steve Cohen thinks this is a great work, then what's my Hirst worth? It substantiates and validates prices."

While art may be an acquired taste for Mr. Cohen, his passion for trading stocks dates to his childhood in Great Neck, N.Y., when he tracked the ups and downs of the market in newspaper financial pages. He hung out at neighborhood brokerage firms as a teenager and traded stocks while at the Wharton School of the University of Pennsylvania.

In advancing his art history education, he has been very much of an autodidact. He has bought a 4,000-volume reference library and supplements it by buying hundreds of books on each new artist who attracts his fancy.

He has also drawn the attention of the world's leading dealers: Mr. Gagosian and Mr. Acquavella, who have become his closest advisers. Both men, not surprisingly, are eager to sing his praises.

"I'd put him on an equal footing with Geffen and Broad," said Mr. Acquavella, referring to the Hollywood figure David Geffen and the financier Eli Broad, widely recognized as two of the world's top collectors of modern art. "They may have more but not better. He is a passionate collector who loves to learn. He is not just decorating his house."

In the last two years his collecting has accelerated. About a year ago he bought a rare drip painting by Pollock from Mr. Geffen for $52 million. He followed that with a Warhol Superman he bought for $25 million from Mr. Gagosian, and then spent $25 million on a 1938 Picasso, "Portrait of a Seated Woman," which he bought from Giraud, Pissarro, Ségalot, dealers with offices in Manhattan and Paris. Other big buys include "Palisades" by Willem de Kooning and a painting of a pope by Francis Bacon for $16.5 million.

And while his dealers say that he has a stock trader's ability to act quickly and buy what he likes, they also say he is just as willing to pull back if there is a buying frenzy for a particular piece. They cite his decision to get out of the bidding at $80 million during last year's heated auction for "Boy With a Pipe," a Picasso painting that was eventually sold for $104 million.

Still, it is his continued aggressiveness as a buyer that makes him susceptible to paying amounts that may sometimes exceed what is considered a fair market price, dealers who have worked with Mr. Cohen say.

Mr. Cohen is not the only young hedge fund investor making a splash in the art market. Kenneth Griffin, 36, the founder of the $8 billion Citadel Investment Group in Chicago, recently bought a Cézanne still life that sold for $60 million at a 1999 auction at Sotheby's. Also active in the art market are Eric Mindich, 36, a former Goldman, Sachs partner who runs Eton Park Capital, and Daniel C. Benton of Andor Capital, both of whom have recently joined the board of the Whitney Museum of American Art.

"These hedge fund guys are having more of an impact on the market than the Saul Steinbergs did," said Richard Feigen, an art dealer who helped Mr. Steinberg put together his collection of old masters.

Mr. Cohen's case is particularly unusual in that a large stake of the $6 billion in his funds consists of his own money; he has been closed to new investors since 1998.

His prowess as a trader has become the stuff of legend on Wall Street, where his active trading strategy makes him one of the largest generators of commissions. His yearly returns have ranged as high as 60 percent to a low of 13 percent, and last year his funds gained 23 percent. His confidence in his trading abilities is such that SAC takes home up to 50 percent of the profits that the funds generate each year, an arrangement that far outpaces the standard hedge fund fee of 20 percent.

Part of what makes Mr. Cohen such an accomplished trader is his equanimity. He rarely shouts or yells, just processes information and marshals his order flow to the 70 portfolio managers who work with him. People who have seen him trade say it is impossible to tell whether he is having the best or the worst day of his life at any given moment in the course of a day.

"Steve is so good because he does not have his ego tied up in each trade," said George Fox, a longtime investor in Mr. Cohen's funds. "He is an anomaly in this business because he hasn't had three good years, he has had 23 good years."